Over the years, use of the Internet has grown to touch almost every facet of people's lives. In the business world, the Internet has been used to advertise goods and services, receive orders for products, and facilitate communication within and among businesses. The Internet has also become a place where borrowers and lenders can find each other, agree to the terms of a loan transaction, and transfer funds. Peer-to-peer lending websites have thus been developed to facilitate such transactions and to provide a forum for borrowers and lenders to conduct business.
In one type of peer-to-peer lending scenario, typically a potential borrower (e.g., an individual wishing to take out a loan) will post an amount that he wishes to borrow and a maximum interest rate he is willing to pay. In some cases, the potential borrower may include a short description of the purpose of the loan, such as to go to college, start a business, or buy a car. A potential lender (e.g., an individual who is seeking to loan money for interest) can then bid on specific loans by offering to lend the potential borrower some or all of the money requested by the potential borrower in exchange for a minimum interest rate specified by the potential lender. A third party, such as a hosting website or web forum, may then match borrowers with appropriate lenders and facilitate the transaction between the parties.
Because such peer-to-peer loan transactions occur in cyberspace, it can be difficult to fully assess the risks involved in lending money to a particular borrower. One way that such risks may be reduced is through the use of collateral to “secure” the loan. Thus, there is a need for receiving collateral from a borrower in an efficient and cost-effective manner and providing access to the collateral to potential lenders and third parties so as to facilitate loan transactions.